Homework Help is Here – Start Your Trial Now!
Business
Accounting
On May 15, 2023, Eric Martin signed a contract to purchase a rental house for $195,000. Closing is to occur on June 8, 2023, with the day of closing to be counted as a day of ownership by the buyer. Eric can assume the seller's first mortgage, which will have a balance of $149,000 during June. The seller, Reuben Smith, has agreed to take a second mortgage of $30,000 as part of the payment at closing. Eric paid an escrow deposit of $10,000 when he signed the purchase contract. Other pertinent facts include: The luno interest on the mortango is $745 which will be paid at the end of the month

On May 15, 2023, Eric Martin signed a contract to purchase a rental house for $195,000. Closing is to occur on June 8, 2023, with the day of closing to be counted as a day of ownership by the buyer. Eric can assume the seller's first mortgage, which will have a balance of $149,000 during June. The seller, Reuben Smith, has agreed to take a second mortgage of $30,000 as part of the payment at closing. Eric paid an escrow deposit of $10,000 when he signed the purchase contract. Other pertinent facts include: The luno interest on the mortango is $745 which will be paid at the end of the month

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Masukh

d On May 15, 2023, Eric Martin signed a contract to purchase a rental house for $195,000. Closing is to occur on June 8, 2023, with the day of closing to be counted as a day of ownership by the buyer. Eric can assume the seller's first mortgage, which will have a balance of $149,000 during June. The seller, Reuben Smith, has agreed to take a second mortgage of $30,000 as part of the payment at closing. Eric paid an escrow deposit of $10,000 when he signed the purchase contract. Other pertinent facts include: a. The June interest on the first mortgage is $745, which will be paid at the end of the month. b. Reuben paid a hazard insurance policy for the calendar year 2023. The premium was $850, and Eric has agreed to purchase Reuben's interest in the policy. c. The monthly rental of $1,250 has been collected by Reuben for June. d. The total amount of property tax for 2023 is estimated to be $2,200. The tax will be paid by Eric at the end of the year. e. The broker will pay the following expenses for Reuben and will be reimbursed at the closing: Abstract continuation Attorney's fee Deed stamps (tax) Brokerage commission (6%) f. The broker will also pay the following expenses for Eric and will be reimbursed at the closing: Attorney's fee Deed recording fee Mortgage recording fee Mortgage note stamps (tax) Intangible tax on mortgage $85.00 $ 300.00 Seller's portion of interest Buyer's portion of the hazard insurance premium Buyer's portion of the monthly rent Seller's portion of the 2023 property taxes $ $ $ $ $ 1,365.00 $ 11,700.00 Required: How will the items be prorated between the seller and buyer? Note: Do not round intermediate calculations and round your final answers to 2 decimal places. $ 250.00 $ 6.00 $ 10.00 $ 682.50 $390.00 Amounts 745.00x 850.00 X 1,250.00 X 2,200.00 x
Transcribed Image Text:d On May 15, 2023, Eric Martin signed a contract to purchase a rental house for $195,000. Closing is to occur on June 8, 2023, with the day of closing to be counted as a day of ownership by the buyer. Eric can assume the seller's first mortgage, which will have a balance of $149,000 during June. The seller, Reuben Smith, has agreed to take a second mortgage of $30,000 as part of the payment at closing. Eric paid an escrow deposit of $10,000 when he signed the purchase contract. Other pertinent facts include: a. The June interest on the first mortgage is $745, which will be paid at the end of the month. b. Reuben paid a hazard insurance policy for the calendar year 2023. The premium was $850, and Eric has agreed to purchase Reuben's interest in the policy. c. The monthly rental of $1,250 has been collected by Reuben for June. d. The total amount of property tax for 2023 is estimated to be $2,200. The tax will be paid by Eric at the end of the year. e. The broker will pay the following expenses for Reuben and will be reimbursed at the closing: Abstract continuation Attorney's fee Deed stamps (tax) Brokerage commission (6%) f. The broker will also pay the following expenses for Eric and will be reimbursed at the closing: Attorney's fee Deed recording fee Mortgage recording fee Mortgage note stamps (tax) Intangible tax on mortgage $85.00 $ 300.00 Seller's portion of interest Buyer's portion of the hazard insurance premium Buyer's portion of the monthly rent Seller's portion of the 2023 property taxes $ $ $ $ $ 1,365.00 $ 11,700.00 Required: How will the items be prorated between the seller and buyer? Note: Do not round intermediate calculations and round your final answers to 2 decimal places. $ 250.00 $ 6.00 $ 10.00 $ 682.50 $390.00 Amounts 745.00x 850.00 X 1,250.00 X 2,200.00 x
Expert Solution
steps

Step by step

Solved in 3 steps with 2 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS